Discovery Labs plans stock offering to fund drug launch
The small Warrington drug company that won FDA approval for a respiratory illness treatment last week is now hoping to raise money to support the rollout of Surfaxin.
What a turnabout for Discovery Laboratories, the Warrington drug discovery company.
First, the company received a long-delayed OK from the Food and Drug Administration March 6 to begin selling its first drug. Surfaxin would be used to prevent a respiratory illness that affects premature infants.
Shares jumped as high as 44 percent to $5.39 on March 7 on word of the FDA approval. They settled that day at $4.08, up 33 cents on heavier than normal volume.
As difficult as it was for Discovery Labs to win FDA approval for Surfaxin, now the challenge for the tiny company will be launching the product later this year.
That takes money and that's partly why Discovery Labs priced on Friday a secondary offering of common stock, which is being managed by Lazard Capital Markets, Stifel Nicolaus Weisel, and Roth Capital Partners.
Here are the details on the offering: It would raise net proceeds of $42.1 million by selling 16.07 million shares at $2.80 per share. You can read the "red herring" here.
Discovery Labs needs to raise money in order to launch Surfaxin. The company had cash of only $10.2 million as of the end of 2011.
Shares closed Friday at $2.85, down 65 cents, or 18.6 percent.